GARIMA AUTOMOBILES P. LTD. Vs. STATE

JUDGEMENT

(1.) THIS petition is filed on behalf of the five companies mentioned in the petition under Section 394 read with Rule 79 of the Companies (Court) Rules, 1959, for sanctioning the scheme of amalgamation as per the scheme enclosed with the petition as annexure 3. As per the said scheme (annexure 3), Garima Automobiles P. Ltd., Kanwal Motors P. Ltd., Charan Leasing and Finance P. Ltd., and Nandalala Motors P. Ltd., after amalgamated with the transferee company M/s. Prem Motors P. Ltd., their assets are to be transferred to the transferee company. On an application filed on behalf of the aforesaid company for making a request for convening meetings of the shareholders and the creditors of the company, this Court appointed Smt. Nandita Dubey as chairperson, and Shri Anand V. Bhardwaj as an alternate chairperson and directed to convene meetings after issuing notices in accordance with the rules. Accordingly, different meetings of shareholders and the creditors of each of the five companies were separately held.

(2.) AFTER the meetings, chairpersons submitted the report. According to the report, there was unanimous decision of all the shareholders for transferring the resolution of the board of directors of all the companies and all the members accorded their approval for amalgamation and for sanctioning the scheme of amalgamation.

(3.) SHRI R.D. Jain, learned Counsel appearing on behalf of the companies opposed this prayer. According to him, an application for amalgamation of the company is filed, and the official liquidator has no locus standi to oppose the amalgamation. He invited attention of this Court to the provisions of Section 394 of the Companies Act, 1956. According to him, Section 394(1)(a) of the Act requires that an application is to be made under Section 391 for sanctioning of a compromise or arrangement proposed between the company or the amalgamation of any two or more companies, and his application is thus covered under Section 394(1)(a), which does not provide any objection by the official liquidator, therefore, he has no locus standi to oppose for amalgamation. In support of his arguments, he has relied on judgment of the Calcutta High Court in the case of Marybong and Kyel Tea Estate Ltd. In re [1977] 47 Comp Cas 802, wherein the company judge has held that second proviso to Section 394(1)(iv) seems to be intended to apply only in cases where there is commencement of winding up either by presentation of a winding up petition or any resolution of voluntary winding up of a company has been passed. That is the case only where an official liquidator has been appointed or could be appointed by the court, otherwise there would be inconsistency and absurdity of the court appointing an official liquidator in case of a going concern where no winding up petition has been presented or resolution for voluntary winding up has been passed. Further, the first proviso to Section 394(1) contemplates a case of a company which is being wound up and before sanctioning the scheme, the report of the Company Law Board or the Registrar is a condition precedent. This proviso relates to a stage prior to the sanctioning of the scheme by the court whereas the second proviso to Section 394(1) contemplates the stage after sanctioning but before passing an order of dissolution under Section 394(1)(iv) of the Companies Act, 1956, and in my view, the said provision only applies to the company in respect of which an official liquidator has been appointed or could be appointed under the provisions of the Companies Act by the court. It has no application to cases, as in the present application, where the transferor company is a going concern in respect of which no winding up petition has been presented or there is no voluntary winding up pending. In my view, that construction seems to be a reasonable and harmonious construction without any violence to the language or the scheme, object and purpose of the Companies Act under the provisions of Section 394(1)(vi).